The Dow Jones Industrial Average (DJIA) saw a strong increase of 450 points on Thursday, driven by better-than-expected US GDP growth numbers in Q2. Investor confidence was bolstered by the positive economic data, with markets anticipating a rate-cutting cycle by the Federal Reserve (Fed) to begin in September. However, a late afternoon pullback limited the gains to around 200 points for the day. The upcoming release of US Personal Consumption Expenditure Price Index (PCE) inflation data on Friday is still the focus for traders.
US Q2 GDP exceeded forecasts on Thursday, with a growth rate of 3.0% compared to the expected 2.8%. Additionally, Initial Jobless Claims decreased to 231K, slightly below the anticipated 232K. These positive economic indicators helped to lift market sentiment and encouraged investors to return to the market with a positive outlook. The core PCE inflation data expected to be released on Friday is forecasted to remain steady on a month-over-month basis, but slightly increase on an annualized basis.
The Dow Jones index showed a strong performance on Thursday, with most listed securities trading in the green. Only three of the Dow’s securities closed in negative territory for the day, with Home Depot experiencing a slight decline. Nvidia’s after-hours earnings call failed to excite tech investors, with the company reporting lower-than-expected earnings growth. Despite this, the Dow Jones index continued to show resilience and maintained its upward momentum.
Looking ahead, traders are monitoring the Dow Jones index as it hovers above the 41,300 level and tests chart resistance near record highs. While there is a potential for a bearish pullback, traders should be cautious of underestimating the prevailing bullish market sentiment. Those looking to capitalize on a potential downtrend may target the 50-day Exponential Moving Average (EMA) above the 40,000 price level. Technical analysis suggests that the index remains in a bullish trend, with potential support levels near key moving averages.
In conclusion, the Dow Jones Industrial Average showed a strong rebound on Thursday, driven by positive US economic data and investor confidence. The upcoming release of US core PCE inflation figures will be closely watched by traders as they assess the likelihood of a Fed rate cut in September. Despite fluctuations in the market, the overall outlook remains positive, with the Dow Jones index continuing to show resilience and maintain its upward trajectory. Traders should remain vigilant and monitor key technical levels to capitalize on potential trading opportunities in the current market environment.
